General Motors Bets on Nikola with Major Investment

Posted on 09/08/2020

General Motors Co. (GM), through General Motors Holdings LLC, is forming a strategic venture with listed company Nikola Corporation. The partnership begins with the Nikola Badger and carries cost reductions through Nikola’s programs, including: Nikola Badger, Nikola Tre, Nikola One, Nikola Two and NZT. As part of the agreement, Nikola will utilize General Motors’ Ultium battery system and Hydrotec fuel cell technology, representing a key commercialization milestone for General Motors.

Furthermore, Nikola will exchange US$ 2 billion in newly issued common stock (47,698,545 shares) for the in-kind services and access to General Motors’ global safety-tested and validated parts and components. GM is essentially getting an 11% stake in Nikola.

General Motors will be subject to a staged lock-up provision beginning in one year and ending in June 2025. General Motors will engineer, homologate, validate and manufacture the Nikola Badger battery electric and fuel cell versions. Nikola will be responsible for the sales and marketing for the Badger and will retain the Nikola Badger brand. The Badger was first announced on Feb. 10, 2020 and will make its public debut December 3-5, at Nikola World 2020 in Arizona. Badger production is expected to start in late 2022 at a location to be announced at a later date.

Under the Master Electric Truck Development Agreement, Nikola will reimburse GM for up to US$ 700,000,000 of capital expenses to make available manufacturing capacity for up to fifty thousand units per year of the initial two vehicles. Additionally, if Nikola requests additional manufacturing capacity in excess of 50,000 units per year, it agrees to reimburse GM for capital expenses incurred exclusively for such additional capacity.

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